It does not happen all the time, but occasionally the moon and the stars align for people who are thinking about getting themselves a new vehicle. I contend that right now is one of those times.
Historically, when new vehicles are selling really well, used vehicles are not. Used vehicle sales go down and so do their values. Conversely, when new vehicles are selling well, you do not see a lot of incentives on them.
Right now, the used vehicle market is on fire. It continues to rise and avoided seasonal lows that we usually see. I’ve been talking about this on the radio show for months. Oddly, we are in the gasoline twilight zone…fuel-efficient car prices have not yet gone through the roof as they have in the past when gas gets to $4 per gallon, and large trucks and SUVs have showed no signs of going down in price. This is highly unusual. For me, it means the used market is SO good right now, that gas prices are not affecting them.
To make my case even stronger that it is a great time to buy, we saw incentive spending go up on new vehicles in April. Generally, this does not happen. The car companies are on a roll and won’t risk lowering incentive spending that might stall the momentum. That’s just the car biz. They put incentives on to make cars move, and when things are improving, they put them on to keep them moving.
So let’s recap; we have an ultra-strong used car market which makes your trade value higher, and we have incredible incentives on new vehicles, making the new vehicle less expensive. That is the pure definition of a buyer’s market in the auto industry.
If you are still not convinced, right now auto loan rates are running at a 10-year low. Last month, the average auto loan in this country was just over 4% and more surprising, the used car rate was just over 5%. It is safe to say those are historically low rates.
For those who want to lease, and don’t drive too many miles per year to do so, there are some smoking lease deals out there, and not just on the luxury cars, but mainstream cars and trucks as well. Generally, lease incentives are pretty well hidden, but all automakers are putting incentives and emphasis on leasing, and that makes lease deals really attractive right now.
So the bottom line here is, no matter if your goal is to your lower cost to buy, or to lower monthly payment, the timing is perfect. Many of you will be able to get a nicer vehicle than you normally would be able to afford.
Whatever your particular case is, vehicles cost less right now than they have in quite some time. For consumers, especially those who tried to trade a year or so ago, look again. Things have changed, and they have changed to your advantage. Loans are getting easier to obtain as well.
For the first time in my 35-year career, I am seeing people trading one–year old cars in on new ones and keeping their payments the same. I would have never thought I would see that, but the climate is right to do that, at least for now.